FORMER LABOR UNION PRESIDENT PLEADS GUILTY TO EMBEZZLING FUNDS GIVEN TO COUNCIL CANDIDATE

Los Angeles, CA - The former president of a local labor union pleaded guilty this afternoon to conspiring with a candidate for the Los Angeles City Council to embezzle money from the union and funnel the funds into his campaign.

Janett Humphries, the former head of Service Employees International Union Local 99, pleaded guilty before United States District Judge Manuel Real to conspiracy and four counts of embezzling union funds. By pleading guilty, Humphries admitted that she conspired with former Los Angeles City Councilman Martin Ludlow to embezzle money from Local 99 and to provide the money to Ludlow's successful 2003 campaign.

"Corruption in organized labor strikes at the very heart of the benefits that unions bring," said United States Attorney Debra Wong Yang. "We owe working men and women our full commitment to root out corruption in public office and in organized labor. Both Humphries and Ludlow broke a promise to their constituents, and the prosecution of these leaders demonstrates our willingness to pursue wrongdoing to highest levels of business and government."

In 2002, Ludlow was part of a hotly contested race to fill a Los Angeles City Council seat being vacated by Councilman Nate Holden. According to a plea agreement filed in court this morning, Ludlow went to Humphries for help in the campaign. Together, the two developed a plan to funnel money into Ludlow's campaign by placing campaign workers on the union's payroll. These campaign workers – the so-called "phantom employees" – received more than $30,000 in salary and benefits from Local 99, but did no actual work for the union.

Local elections laws place a $500 limit on campaign contributions, so the contributions to the Ludlow campaign workers violated this law. Paying the Ludlow campaign workers with union money also amounted to an embezzlement of the union's funds, as neither the union's Board of Trustees nor Executive Board approved the expenditures. When the unlawful payments came to light shortly after the primary election in 2003, Ludlow, Humphries and others tried to cover them up. The two participated in the fabrication of documents, altered union records, and had two of the campaign employees create bogus work product to make it appear that they had actually performed work for the union.

"The self-serving scheme to which Ms. Humphries pleaded guilty deprived citizens of honest local representation," said J. Stephen Tidwell, Assistant Director in Charge of the FBI in Los Angeles. "The FBI takes any form of corruption by elected and appointed officials seriously, and will continue to work with agency partners to weed it out and restore public trust in government."

Humphries, a 63-year-old Los Angeles resident, is scheduled to be sentenced by Judge Real on February 26. At sentencing, she faces a maximum statutory penalty of 25 years in federal prison.

In March 2006, Ludlow pleaded guilty to one count of conspiracy to violate the Labor Management Reporting and Disclosure Act, which makes it a crime for an officer of a labor organization – in the case, Humphries – to embezzle union funds. Ludlow was sentenced in June to probation, and was ordered to perform 2,000 hours of community service and to pay $36,492 in restitution.

Gordon S. Heddell, Inspector General, United States Department of Labor, stated: "The misuse of union funds by corrupt union officials will not be tolerated. Today's guilty plea by Janett Humphries, along with the earlier guilty plea by Martin Ludlow, demonstrates how firmly committed my office is to investigating labor racketeering activity. We will continue to work cooperatively with other law enforcement agencies, the Department of Labor, and the Department of Justice to protect union member funds."

The cases against Ludlow and Humphries were investigated by the Office of Labor Racketeering and the Office of Labor-Management Standards, both within the United States Department of Labor, as well as the Federal Bureau of Investigation. The Los Angeles County District Attorney's Office and the City of Los Angeles Ethics Commission participated in the investigation.